Oil sector withholding data on rail cargoes, says US regulator

The scene of the fatal rail explosion in Lac-Megantic, Quebec, in July.

By Patrick Rucker, Reuters

Posted March 29, 2014, at 3:41 p.m.

WASHINGTON — U.S. transport regulators on Friday scolded the oil industry for not sharing important information on the kinds of rail shipments that have been involved in a number of fiery train derailments.

The American Petroleum Institute, a trade group that represents oil industry companies, disputed the accusations.

In letters to regulators and testimony to lawmakers, leaders of trade groups like the API have said since January that they will share results of their tests on fuel from North Dakota’s booming Bakken oil patch, where the derailed trains were loaded.

But the Department of Transportation said the industry has dragged its feet in cooperating with regulators who are trying to understand why several recent derailments of freight trains carrying crude oil also resulted in explosions.

“Despite the energy industry making assurances to DOT more than two months ago, we still lack data we requested and that energy stakeholders agreed to produce,” a DOT spokeswoman told Reuters in a written statement on Friday. “The overall and ongoing lack of cooperation is disappointing, slows progress, and certainly raises concerns.”

Officials have been scrutinizing North Dakota rail shipments since a derailment in July in the Canadian town of Lac Megantic killed 47. Other derailments in North Dakota and Alabama prompted more scrutiny.

API President and CEO Jack Gerard said in a statement the industry has been “cooperating and sharing proprietary data with the Department of Transportation on the characteristics of crude oil. Reports to the contrary are false.”

API cited Feb. 26 congressional testimony by Cynthia Quarterman, director of the DOT’s Pipeline and Hazardous Materials Safety Administration, who said many oil companies were sharing information with her agency.

Another industry representative denied that stonewalling was taking place. “We continue to do prospective testing, and we will continue to share that information,” the representative said.

The DOT did not specify which company or industry group failed to share information, but wrote that “we still lack data we requested and that energy stakeholders agreed to produce within 30 days.”

One energy industry trade group, the American Fuel & Petrochemical Manufacturers, said the DOT has requested confidential business information that companies may be reluctant to share.

In recent months, DOT technicians have run spot-checks at wellheads and loading terminals in North Dakota to see that fuel on the tracks is being handled properly. Officials say they also need industry data.

In early January, PHMSA warned that the light oil typically produced in the Bakken could be more volatile than traditional heavy crude oil.

By late January, the API said it would “share expertise and testing information with DOT, most notably PHMSA, about characteristics of crude oil in the Bakken region.”

Some North Dakota shippers have shared their knowledge about Bakken crude, PHMSA’s Quarterman told lawmakers last month. But DOT officials say many shippers have gotten mixed messages from trade groups about how much they should aid regulators.

Richard Moskowitz, chief counsel for the AFPM, said he told refiners “they have a choice to provide DOT the information directly or to work through the association that is in the process of providing a consolidated response.”

Bakken fuel is typically carried in standard tank cars but it may contain large amounts of flammable gas, thus requiring more care on the tracks, officials have said.

Shippers must label their cargoes with hazardous materials warnings, but officials want the industry to go further and share data from chemical tests or other studies they have conducted on Bakken fuel.

Moskowitz said some refiners have misgivings about handing over details about their operations and business.

“They have asked for parameters of crude oil that are confidential business information that our members don’t share,” he said.

The refining sector is preparing an aggregate report of industry tests on North Dakota fuel that it hopes will satisfy regulators, Moskowitz said.

A DOT official said regulators can allay industry concerns about sharing proprietary information.

While federal officials lead the push for answers, state and local officials along the oil-by-rail routes are also concerned.

Upstate New York has become a major shipping route with roughly 20 percent of Bakken fuel moved through the state.

“We need to understand the exact properties of the crude oil in these trains,” said Basil Seggos, New York Deputy Secretary for the Environment. “It is unacceptable that the petroleum industry has stonewalled on this fundamental safety question.”